Beware not just amnesty, but the B2-trn borrowing bill, and the rest

The proposed bill stipulates that all cases involving political movements and politicians since the last coup in 2006 up to August 8 this year be wiped away. Several cases pending at the Anti-Corruption Commission – the rice price pledging spending spree among them – incriminate the prime minister herself and several of her Cabinet members.

The government and its pollsters got it all wrong. The bill has brought ordinary folk who had never before participated in political rallies out of the comfort zone of their homes and onto the streets. The so-called silent majority is no longer willing to keep quiet.

But the amnesty bill is just the first strike in the “one-two” punch that would bring the country to its knees. The other is the Bt2-trillion off-budget borrowing bill that is still pending in the House.

But even if both bills are defeated, other benefits “on the fringe” will still mean real money flows to the powers-that-be and their cronies. The ongoing Cabinet “roadshow” to sell the B2-trillion borrowing bill has already handed out billions of baht to provinces and villages through which the high-speed train and new highways are supposed to run. The handouts are in reality vote-gathering, and the profits from land-price speculation have already been spread among government supporters. This is all about “you scratch my back and I’ll scratch yours” – Tributes and Profits, pure and simple.

Wielding its one-two punch, the government thinks it will ultimately be the winner, and that its opponents will be defeated because they have neither the dough nor the staying power to stand in its way.

If such is the case, the real losers will be the country and its people.

On November 4, Forbes Magazine ran an article titled “Thailand’s Bubble Economy is Heading for a 1977-Style Crash”. A well-researched piece, it tells of the evils of an unabated household and public debt that is not being used to increase economic output but to feed consumers’ addiction to cash and what cash can buy.

Thailand is among the emerging economies that have benefited from low rates of interest in developed countries plus their quantitative easing stimulus programmes, the author notes. The inflow of foreign capital – so-called hot money – has more than doubled Thailand’s total external debt exposure. It is Thailand’s credit bubble, not its exports, that has helped boost the country’s economic growth and consumer spending. Domestic credit to Thailand’s private sector as a percentage of the country’s GDP has risen alarmingly and will eventually come back to haunt us. The article cites the first-car tax rebate as a significant contributor to the recent increase in Thai household debt, with hundreds of thousands of debtors set to default once the tax break expires. Thailand’s household debt-to-GDP now stands at 77 per cent – up from 55 per cent in 2008 and 45 per cent a decade ago – making it one of the highest ratios in Asia.

However, even worse than consumers debt binge is the government’s. The country is now running a large budget deficit to support its spending.

Fuelling this deficit is the government’s many questionable stimulus programmes. Among them are the US$2.5-billion first-car tax rebate, the $4.4-billion failed rice subsidy scheme, the subsidy for first-time homebuyers, the three-year debt moratorium programme, the cut in personal income tax, the fuel subsidy, the free computer tablets (most of which are now broken), the salary increase for government officials and the rubber subsidy. The author describes its spending binge as part of the Thai government’s assumption that an Asian Century-style regional growth boom will happen many years down the road.  But he cautions that such an assumption may be mere fantasy. Thailand’s export-sector growth in recent years has been based on the growth of China’s economy. More than half of Thai exports head to Asean countries and China, all of which are experiencing growth-boosting economic bubbles of their own. Thai exports account for about three-quarters of our GDP, making us extremely susceptible to the economic status of our trading partners. Our so-called Big Brother, China, is now at a crossroads economically. Most of its domestic stimulus programmes have been undertaken, new towns and cities have been built, yet many of them are standing empty.

The Forbes article fails to mention the government’s many off-budget stimulus spending schemes that use state-owned banks such as the Bank for Agriculture and Cooperative and the Government Saving Bank, both of which are on the brink of going under.

A few days ago, our prime minister gave an interview to CNN. Noting that she was Thailand’s first female prime minister, she concluded the interview with a plea to the Thai public to give her a chance – as a woman leader, presumably.

We ordinary Thais would ask her for the same. Please give us a chance, not to be anything, but to survive intact instead of being mangled in economic, social and political wreckage.